is this right ? the importance of the Elasticity of substitution? The elasticity of substitution allows us to determine how much of one input can be substituted for another in the production process to get the same amount of output. It allows us to determine if two inputs can be substituted or not (Perfect substitutes or compliments) for one another without decreasing output and if the addition of input can produce increasing returns to scale, constant return to scale, and decreasing returns. This will help a firm to minimise cost and maximise output